AFE Quiz 21: Accounts Receivable – Accounting for Everyone

What is Accounts Receivable?

Amounts owed to customers for goods or services provided
Amounts owed by customers for goods or services provided
Amounts owed to suppliers for purchases
Amounts paid in advance for future expenses

Accounts Receivable is classified as which type of account?

Liability
Expense
Current Asset
Revenue

Which of the following increases Accounts Receivable?

Receiving cash from customers
Making a credit sale
Writing off bad debts
Paying suppliers

What is the normal balance of the Accounts Receivable account?

Credit
Debit
No balance
Varies

Which of the following would decrease Accounts Receivable?

Making a credit sale
Collecting cash from customers
Providing services on account
Charging interest on overdue accounts

What is the purpose of the Allowance for Doubtful Accounts?

To record actual bad debts as they occur
To estimate uncollectible accounts
To increase revenue
To record cash receipts

Which method estimates bad debts as a percentage of sales or receivables?

Direct write-off method
Allowance method
Cash basis method
Accrual basis method

Which of the following is TRUE about writing off an account under the allowance method?

Total assets decrease
Total assets remain unchanged
Net income increases
Expenses increase

Which document is typically sent to customers to request payment for goods or services sold on account?

Invoice
Credit memo
Purchase order
Bank statement

Which of the following is a common internal control over Accounts Receivable?

Segregation of duties
Allowing one person to handle all transactions
Not reconciling subsidiary ledgers
Ignoring overdue accounts